NASD Arbitrators Reject Dyslexic Investor's
Complaint

February 9, 2005 (PLANSPONSOR.com) - Arbitrators
have brushed off claims that a dyslexic Pennsylvania investor
overspent her Merrill Lynch brokerage account because the
company did not accommodate her learning
disability.

Patricia Sukonik claimed in an arbitration hearing
before the National Association of Securities Dealers
that Merrill Lynch mishandled her account from early 2000
until the fall of 2002, Dow Jones reported. The problem:
she thought she had more funds in the account than she
did because the company didn’t properly explain the
account to her, Sukonik charged.

The arbitration panel disagreed. “The sole reason
that claimant’s Merrill Lynch accounts declined in value
was the claimant’s overspending,” the panel wrote, adding
that the company “made every possible attempt” to
accommodate her dyslexia. Written decisions are unusual
for arbitration panels, but in this case the three
panelists issued a six-page, 40-point decision outlining
their reasons.

Sukonik claimed the company used an options
strategy that involved writing covered calls to generate
income from her stock portfolio, which was too risky – a
claim the arbitrators rejected, finding that she had no
significant loss attributable to the covered call writing
strategy. Covered-call writing involves selling call
options contracts backed by stock shares owned in an
account, in an attempt to take advantage of a declining
or flat stock.

She also said Merrill didn’t explain her ongoing
account value in a way that a person with dyslexia could
understand. However, Merrill countered that Sukonik
understood her brokerage statement well enough to call
and complain about commission charges for a trade, and
that its statements displayed the account value
prominently on the first page of every statement.

The account, which totaled $400,000 when she first
came to Merrill, was her sole source of income, and she
sought to recoup $200,000 in damages in arbitration. The
company said she was told verbally that she couldn’t
withdraw the $41,000 annually that she wanted to spend
without eroding the account value, and was warned about
15 times that she was overspending.

Merrill Lynch spokesman Mark Herr said the company
was pleased with the award. “As the panel clearly found,
the investor’s accounts diminished because she overspent
her accounts,” he said.